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Pay TV a Mixed Bag: Stabilized but Still Challenged

30 Jul, 2014 By: Doug McPherson

SCOTTSDALE, Ariz. – Despite rough times of late, the U.S. pay TV market appears to have stabilized, ABI Research says.

MediaPost News reports ABI says the North American cable TV market lost around 4 percent of its subscribers in 2013. This year, estimates are that it will total 113.2 million subscribers – looking at all distributors: cable, satellite and telco. The study says the worldwide pay-TV market will get to 936.4 million at the end of 2014, generating $280.4 billion in revenue.

ABI says the worldwide pay-TV subscriber base will climb to 1.1 billion subscribers in 2019 – thanks to growing Asia-Pacific and Latin America markets. Overall revenue will hit $331 billion in 2019. The company also expects that high-definition will continue to grow and will be in homes representing 45 percent of the total pay-TV subscriber base by the end of 2014.

In related news, market researcher TNS says that while 34 percent of U.S. homes have streamed video in the previous month, most also bought pay TV services. More than 26 percent watch both pay TV and streaming viewing. Just 8 percent watch only streaming video.

But Frank Perazzini, vice president of TNS, says the pay-TV industry will continue to be challenged. “Given the emerging challenges from alternative channels, the sustainability of traditional pay-TV service could be vulnerable if new pricing models offer consumers access to the content they desire at lower rates than are available today,” he says.

Helping keep consumers at bay for pay-TV providers could be the new TV Everywhere and other mobile apps, delivering more on-demand viewing.

TV households in transition – those that are moving – can be particularly vulnerable to pay TV changes. About 50 percent of “mover” households have used streaming in the past month, compared to less than a third (32 percent) of non-mover households. Furthermore, nearly one in six movers view only streaming video – compared to just one in 14 non-movers. And among movers, the overall U.S. home penetration of streaming is at 50 percent, with traditional pay-TV services at 37 percent.

The NPD Group reports the number of streaming media devices in the U.S. will reach 204 million by 2017 – an increase of 100 percent and a total that will be more than double the number of projected households connected to the Internet.

The growth is being driven by two market forces: More devices in the marketplace and a higher likelihood of consumers using them, says John Buffone, executive director of NPD Connected Intelligence.

“First and foremost, there’s more product in the market,” Buffone tells Marketing Daily. “Second, consumers have a higher propensity to connect these devices and they’re more likely to use the apps that come with them.”

The connection rate is also projected to increase. While 60 percent of Internet-capable devices are currently connected, NPD projects that 76 percent of installed units will be connected by 2017. The rate will increase thanks to upgrades that prompt consumers to connect to the Internet when initializing their device, increased app programming from TV networks and user interface improvements.

“The hardware is able to engage with consumers in ways that it hadn’t before,” Buffone says. “Over the coming years, the consumer’s preferred device for apps on TV will be shaped by the next generation of video game consoles, smart TVs, and a new wave of streaming media players.”

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